618 S. Main Gets Go-Ahead from Council

At its June 18, 2012 meeting, the Ann Arbor city council approved the site plan and the brownfield development financing for the 618 S. Main project.

The 618 S. Main project is an apartment complex that developer Dan Ketelaar intends to market to young professionals. The 7-story building would include 190 units for 231 bedrooms, plus two levels of parking for 121 vehicles. The project had received approval from the city planning commission on Jan. 19, 2012.

At 85-feet tall, the project is 25 feet higher than permitted in the D2 (downtown interface) zoning district where the site is located. So it was submitted as a “planned project” – a provision in the zoning code that allows some flexibility in height or setbacks, in exchange for public benefits.

A planned project is not the same thing as a planned unit development (PUD), which allows for significant variance from the existing zoning by actually changing the zoning on a parcel. Among the public benefits cited for 618 S. Main is a rain garden system for stormwater infiltration, which is expected to reduce stormwater volume in the city’s piped system (which is required by code), but would also result in cleaner flow.

The project borders the Old West Side historic district – and the board of the Old West Side Association submitted a letter of support for the development. The vote on the site plan for the project was 8-2, with Stephen Kunselman (Ward 3) and Mike Anglin (Ward 5) voting against it. [Sandi Smith (Ward 1) was absent, leaving 10 councilmembers in attendance.] In arguing against the project, Kunselman delivered some of the harshest rhetoric the council chambers has heard in some time, describing developers as “speculators” who would put a knife in your back with a smile on their face.

On a separate vote, the council also approved a brownfield financing plan for 618 S. Main. The brownfield tax increment finance (TIF) plan works in concert with a $650,000 TIF grant (paid over a period of four years) awarded by the Ann Arbor Downtown Development Authority board at its June 6, 2012 meeting. Both the brownfield TIF and the DDA TIF support work in a similar way: The developer must build the project and pay the new taxes on the project. After that, the developer receives reimbursement for eligible expenses.

The DDA’s grant covers work in the following categories: streetscape improvement costs; a rain garden to infiltrate storm water, as opposed to detention-and-release; and upsizing a water main. Work covered by the brownfield plan includes: site investigations for characterization of soils and dewatering if water is encountered during excavation; disposal of soils; demolition of buildings and removal of existing site improvements; lead and asbestos abatement; infrastructure improvements like water, storm sewer and sanitary sewer upgrades, street repair and improvements to streets; and site preparation like staking, geotechnical engineering, clearing and grubbing.

The brownfield plan includes developer reimbursements of $3.7 million over 21 years. The city’s financial analysis puts the rate of return on the investment between 5.81% and 6.13%. The city’s analysis concludes that the rates of return are below previously-approved brownfield plans. A risk identified in the city’s analysis is the fact that, based on the financial pro forma submitted by the developer, the return to the developer is low. [.pdf of the TIF analysis]

The city council’s brownfield review committee – Sandi Smith (Ward 1), Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4) – had given the 618 S. Main project a 3-0 vote recommending the city council’s approval of the plan.

The council’s vote on the brownfield plan was 8-2 with Kunselman and Anglin dissenting. At the meeting, Kunselman characterized his vote in favor of the brownfield plan as a part of the brownfield review committee as similar to the way that councilmemers will vote for an ordinance revision at first reading but vote against it at the second and final reading.

The 618 S. Main project brownfield plan still requires final review and approval by the Washtenaw County Brownfield Redevelopment Authority (WCBRA) and the Washtenaw County board of commissioners.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]